BOJ Head Warns of Side Effects, Spillover of Ultra-Easy Policy

Central banks of advanced nations must be mindful of the drawbacks of aggressive monetary easing and spillover effects such as rises in commodity prices and an unwelcome inflow of funds into emerging economies, Bank of Japan Governor Masaaki Shirakawa said.

While aggressive easing is necessary to deal with the pain from bursting asset bubbles, its side-effects and limits need to be taken into account, according to a text published on Monday of a speech Shirakawa delivered in Washington over the weekend.

"While it is understable that central banks would pursue the stability of their own economies in the conduct of monetary policy, it is increasingly important to take into account the international spillovers and feedback effects of their own economies," he said.

Some emerging nations have blamed the ultra-loose monetary policies of U.S., European and Japanese central banks for pushing up commodity costs and accelerating inflation in their economies.

Shirakawa delivered the speech on Saturday at a conference sponsored by the Federal Reserve held in Washington.